Managing production is a very challenging task in today's volatile & competitive market!
Last week I was traveling with my friend who is a Business Development Manager (BDM) in a Multi-national Company (MNC). Within a short journey of 2 hours, he received few phone calls from Customers & Operations Teams (Production, Purchase, PPC, Quality, and Dispatch). I was listening & observing his reactions. I came to the conclusion of how much is the hectic job of BDM? As a “lean management thinker,” I calmly listened to his conversion and asked him “what is the problem? Why such problems occurred? What are the reactions of the operations team? What is the reaction of customer? How you tackle such situations?” And the conversation continued.....
I tried to understand the problems, there is an urgent need of 500 Workpieces by the customer. Customer released purchase order for 500 pieces. The sales team forwarded the order to Production Planning and Control (PPC), PPC asked the production team to produce 500 pieces. But after 2 days when Sales asked for Order (finished products), it was not ready. Sales questioned, “why an order is not ready?” The production team answered, “enough raw material was not available”. Sales asked the purchasing department “why there is no raw material when we have the urgent customer need?” Purchase Department answered, “due to nonpayment supplier didn't supply raw material”. Sales asked Accounts Team to clear the payment of the supplier As soon as possible (ASAP).
Normally such issues occur in a factory or business but the story didn't end here!
After some discussion with Store & Production Team, he investigated & found that there was the raw material for 600 Pieces was available in the Store and yet Production Team didn't process the order of 500 pieces. ‘I was surprised, why they didn't process the raw material when there was enough raw material for fulfilling Customer’s Order’. After more investigation he replied to me, Production Team sets norms of minimum batch size hence they didn't process and they need at least a batch size of 2000 Pieces for production.
Which wastes have you identified in this conversation?
Your answer could be: 1) Waiting for raw material 2) Overproduction – producing 2000 pieces when an order of only 500 3) Over-processing – while storage of extra pieces in store you need oiling & extra care of FG 4) Transportation – Moving extra FG material from production to store & store to dispatch 5) Inventory – Excess inventory storage
Can you imagine why such a problem occurs in the factory?
There may be several reasons but commonly occurring problems are
- Communication gap between Sales team and Operations team:
In every organization, the Sales Team shares the production requirement with the PPC department based on Customer order & sales forecast. The PPC department prepares a monthly production planning and schedules the production activities as per the customer requirements (What? Who? When? How much?), also the PPC department plans for resources (Man, Machine, Raw Material). If this system works well there would be fewer problems, but if there is a problem with the factor of inventory that accumulates between the work stations and the whole system gets blocked then one cannot deliver an order within the Customer’s stipulated time.
- Lack of inventory management system
We only deliver a customer order (In-full, On-time, Error-free) when we have enough inventory (R.M., WIP, FG) with us. Therefore Inventory management system plays an important role in managing production. Inventory requirement at each workstation can be calculated based on customer requirement & capacity of production of that workstation. The material flow along all the workstations can be streamlined through the Technique of Value Stream Mapping and buffer stock maintained at each workstation can be avoided to prevent stock-out situations in emergency situations.
- Traditional manufacturing mindset (batch size based production)
This type of problem occurs many times in industry but the situations are different. Many organizations have calculated some batch size of production for each item. They only produce that much quantity even if there is no requirement, and a smaller quantity is not delivered as needed by the Customer, as discussed in the above story.
When it is fixed & repetitive order production Production Team sets a batch size by calculating production time (Changeover time, die maintenance time, setup time etc.) but if there is a single order or first order for a smaller quantity then we have to produce the smaller quantity as needed by the Customer.
How ‘lean management’ will help in managing production?
To prevent such problems communication gap should be avoided between Sales Team and Operations Team, PPC, Store & Dispatch, Visual production planning board helps in improving communication on the shop-floor. Variability of customer demand can be managed through ‘Super Market’ so there will be no stock out nor excess overstocking. ‘Lean Manufacturing’ also supported through process optimization and reduction of Change-Over time so one can produce as per the customer demand.
If you are facing similar problems at your workplace and want to implement a lean manufacturing system connect with us at